Monday 3rd October 2016
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4RF, the Wellington-based microwave radio products developer, narrowed its 2016 loss as sales grew, and says that trend has continued into the current year as it enters new markets.
The net loss was $868,000 in the 12 months ended March 31, 2016, from a loss of $4.2 million a year earlier, the company's annual report said. The loss before interest and tax narrowed to $421,000, from $4 million in 2015, on a 51 percent revenue gain to $23.2 million.
Sales are growing very strongly in 2017, 4RF director Ian Troughton said, adding that the company was building up its established subsidiaries in Europe, Australia and the US and expanding its Wellington-based research and development team.
"4RF consolidated its technology leadership position in the narrowband radio market with significant account wins throughout the world despite strongly entrenched competition," Troughton said in his report. "So far in FY17 this trend has continued with new product sales growing very strongly year on year as we successfully penetrate new markets."
In 2012, Israeli private equity group Fortissimo Capital paid US$8 million for 4RF, allowing the receivers to repay creditors and settle with noteholders. The former parent company, 4RF Communications, was put in receivership in April that year after failing to reach agreement on restructuring some $5.5 million of convertible notes.
4RF has accumulated losses of $20.2 million, and posted a total loss of $1.2 million in 2016 once foreign exchange was accounted for. The directors said 4RF's continuation as a going concern was reliant on continued support from Fortissimo and the accounts were prepared on that basis. The company can meet its debts over the next year with the support of its parent.
Operating revenue growth was driven by sales of its Aprisa radio products, which rose 52 percent to $20.8 million in the year, while cost of materials jumped 56 percent to $10.9 million.
Research and development expenses dropped 21 percent to $3.3 million, which includes $2.5 million in wages and salaries, down from $2.7 million a year earlier. 4RF received $684,000 in growth grants from Callaghan Innovation, down from $832,000 a year earlier, which offset the cost of R&D.
The parent company has $14.1 million in deferred tax losses to carry forward, up from $13.2 million in 2015, the report shows. The directors said a deferred tax asset has not been recognised for tax losses "because we are unsure when future taxable profits will be available to use against the taxable losses carried forward."
If the deferred tax asset was recognised it would be included as a $3.95 million non-current asset. 4RF's tax expense in 2016 was $175,000.
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